Part IV: The International Dimension
Part IV provides a brief summary of the international context relevant to the issue of parallel-importing restrictions, including:
- relevant international agreements in the copyright area;
- the situation in Australia in respect of copyright and parallel imports;
- the position in a selection of other countries.
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4.1 New Zealand's International Obligations
215. International law does not require countries to provide or refrain from providing parallel-importing restrictions in national copyright laws.
216. The primary international agreement in the copyright area, the 1971 Berne Convention for the Protection of Literary and Artistic Works, 38
does not address the issue of parallel imports. Nor does it prescribe the extent to which copyright holders should be given control over the distribution of their works, once these have been sold or put into circulation.
217. The latest international agreements in the copyright and related rights area - the World Intellectual Property Organisation (WIPO) Copyright Treaty and Performances and Phonograms Treaty 39 - expressly leave the question of parallel-importing bans to member countries to decide for themselves. The 1994 World Trade Organisation Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPs) takes a similar approach. 40
Article 6 of TRIPs states that:
For the purposes of dispute settlement under this Agreement, subject to the provisions of Articles 3 and 4, nothing in this Agreement shall be used to address the issue of the exhaustion of intellectual property rights.
218. There are, therefore, no grounds under TRIPs for one country to challenge the absence of parallel-importing restrictions in another. Article 6 means that the only obligations under TRIPs that can be used by one country to challenge another country's position on parallel importing are those relating to national treatment (Article 3) and most-favoured-nation treatment (Article 4). These grounds could arise where a parallel-importing ban was in place in respect of New Zealand products but not overseas products, which would confer more favourable treatment on New Zealanders in comparison with the nationals of other WTO member countries. So it would not be possible for New Zealand to impose restrictions only on the (re-)importation of New Zealand goods, such as New Zealand books remaindered in overseas markets. This would breach our TRIPs obligations. Restrictions would have to apply to all goods regardless of the source - for example, in the case of books, it would have to apply to both New Zealand and overseas titles.
4.2 Developments in Australia
219. The Australian Government recently announced that it intends to remove the parallel-importing bans in place in Australia in respect of books and software. This follows changes that allowed the parallel importing of foreign book titles in some limited circumstances in 1991, and the subsequent removal of the ban altogether for music recordings (in 1998) and goods with copyright labels and packaging (in early 2000). A ban still remains for motion picture products, and the Australian Government has not indicated whether it intends to examine this.
220. The decisions to remove parallel-importing bans in Australia followed a number of detailed studies undertaken for the Australian Government over the last decade - by the Australian Competition and Consumer Commission (ACCC), by its predecessor the Price Surveillance Authority 41 and, most recently, by the Intellectual Property & Competition Review Committee (the "Ergas Committee"). The reports of these bodies concluded overall that Australian consumers were paying more than many other countries for music, books and software and that parallel-importing bans were one of the main reasons for this.
221. The recent decision to remove parallel-importing restrictions for software and books followed the Ergas Committee's report 42 to the Australian Government. The Committee's majority view was that parallel-importing restrictions resulted in higher prices for consumers and that most of the additional revenue gained off shore flowed to overseas right holders. The report emphasised the potential adverse effects of parallel-importing bans on an economy that is smaller than many of its trading partners. The majority recommendation was that all remaining parallel-importing restrictions in place under copyright law be removed, on the basis that their removal would allow increased intra-brand competition to the benefit of Australian consumers.
222. A number of these recent Australian reports considered the argument that parallel-importing bans allow international copyright holders to invest in and promote local creative industries. The ACCC and Ergas Committee both viewed thisargument with some suspicion. In its March 1999 report on parallel-importing restrictions and books, the ACCC 43 concluded that:
… talented Australian authors will continue to flourish in the international arena even if the Australian market is opened. Investments in developing export markets will occur if expected returns justify the investments.
223. Similarly, the Ergas Committee's April 2000 interim parallel-importing report 44 considered cross-subsidisation arguments. It noted:
As regards the most general concerns, the Committee is of the view that restrictions which primarily increase the returns that suppliers of material originally made overseas, and whose primary ownership remains overseas, can obtain from sales in Australia seem a relatively poor means of promoting Australian output and welfare. Even if there were such an effect, and it has been asserted rather than shown, the marginal increment in Australian output would be obtained at higher prices for the far larger base of goods secured from overseas.
| Request for Information 4.2 The Ministry requests information on any potential implications that the removal of Australian parallel-importing restrictions (on music recordings, books and software products) would have for New Zealand, if New Zealand introduced parallel-importing restrictions of up to two years on those products. |
4.3 Approaches in Other Countries
224. There is no standard international approach to the parallel importation of copyright goods. The question of whether to have legislated bans is a contentious issue in many countries. Whether individual countries have such bans can usually be related to whether they are net exporters or net importers of copyright products.
225. The following table summarises the situation in seven other countries and the European Union (EU) concerning the parallel importation of copyright goods:
| Country | Copyright Prohibition on Parallel Imports? |
| Short answer | Explanation |
| Australia | Yes (except music recordings) but bans on software and books are to be removed | Currently have a ban on all copyright goods with the exception of music records, goods with copyright labels and packaging, and books that have not been released in Australia within 30 days of first international release or are not available from local distributors. However, the Australian Government has announced that it intends to remove the ban on books, periodicals, printed music, and software products (including computer-based games). |
| United States | Yes | General prohibition in legislation, but a recent Supreme Court case45 determined that copyright in labels and packaging cannot be used to restrict parallel importing. |
| Canada | Yes, but limited to books and products made under licence for sale in other countries | Special rules for books as in Australia, but for other copyright goods only has a prohibition in respect of goods produced under licence for which a Canadian holds the copyright. |
| United Kingdom | Yes, but does not apply to imports from other EU countries | General prohibition in respect of copyright goods, but this does not apply in respect of imports from the EU. |
| European Union46 | Yes, but does not apply within the EU | EU members are required to have a ban on parallel-importation of computer programs, music recordings, and videos from outside the EU; but they are not allowed to have restrictions on parallel imports from other EU countries. |
| Japan | No (except motion picture products) | Ban only in respect of motion picture products. |
| Singapore | No | No restrictions on parallel importation of any copyright goods. |
| Switzerland | Yes (except music recordings) | General prohibition, but does not apply to music recordings. |
226. The following general points can be noted from the above table:
- A number of other countries do not have parallel-import bans on copyright goods (for example, Singapore and Japan).47
- The EU treats parallel importing as a trade issue - that is, parallel importing is allowed between member countries, but not between member and "other" countries.
| Request for Information 4.3 The Ministry requests any further information on the status of parallel-importing bans on copyright goods in countries comparable to New Zealand - including experiences in those countries concerning the effectiveness or otherwise of bans in encouraging investment in and promotion of local creative industries. |
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47 Japan does have some restrictions in respect of film and video.
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